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Friday, 2 October 2015

A Harbinger of Prolonged Economic Woes in the U.S. Just Hit Another Record High

About the only remaining economic indicator still heading upwards in the U.S. these days is the least wanted one to do so; the money supply. Why? Firstly, because money is created as debt and the U.S. has more debt than it can cope with already. Secondly, as an inflating money supply creates economic distortions and misallocations that must come to an end as they are not sustainable. 

Many real economic indicators on the other hand continue to head nowhere but down. The ECRI leading economic indicator has declined every single week on a y/y basis for all of 2015 - that's 41 consecutive weeks of declines. The last time this happened was during the 43 weeks preceding the Lehman bust in mid September 2008.

Manufacturing shipments for August reported today was no better: the 10th consecutive month with y/y declines with shipments falling 5.0% and 4.9% during July and August. 

As economic growth is created through production (and saving which fuels investments) and as an inflating money supply squanders this process, the current record money supply to manufacturing ratio for the U.S. can only be the harbinger of prolonged difficult times for the U.S. economy. 


As I've explained many times before (e.g. here) the U.S. economy has never really improved in the aftermath of the 2008 banking crisis. Instead, the economic aggregates have been pushed up by one key ingredient which brings bad news rather than good; an inflating money supply. By the looks of things, the stock market casino is waking up to reality. 

Related: 

Why GDP Growth Will Slide For Years To Come

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